Wage trends in SLO County

Over the past eight years, a Paso Robles manufacturing executive has seen his already enviable paycheck soar. A unionized Atascadero city worker’s wages, meanwhile, have stagnated during that time, and a San Luis Obispo barista works three jobs to pay the bills.

Three workers. Three different stories.

Yet they represent what has happened on the local wage front during the past eight years.

Since 2002, workers at the bottom and middle have seen their combined percentage of the economic pie shrink by about 24 percent.

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The middle class in particular — those earning $30,000 to $79,999 — is being squeezed the most, according to a Tribune analysis of the state Employment Development Department’s quarterly survey of the county workforce.

Consider these statistics:

Total wages paid to San Luis Obispo County workers increased by about $700 million from 2002 to 2009 — to about $3.4 billion from $2.7 billion. Much of that growth occurred before the economic downturn struck in fall 2008. The share of earnings paid to workers who make $80,000 and above increased by 325 percent from 2002 to 2009.

The share of earnings paid to middle-income workers declined by about 5 percent, while that portion of the workforce increased by roughly 7 percent. The share of earnings paid to workers who make $29,999 or less decreased by about 28 percent, while that portion of the workforce fell approximately 16 percent.

Brad Kemp of Beacon Economics, a firm based in San Rafael, said the people who have been most hurt in the recession have been those at the bottom.

That explains why there has been a contraction in the number of those actually working at the bottom third of the wage scale. Those people have either moved away, become unemployed or dropped out of the workforce altogether.

Although San Luis Obispo County hasn’t traditionally had a strong supply of high-paying, low-skilled manufacturing and blue-collar jobs, the loss of such positions in recent years has taken its toll, academics and economists said. That has occurred at the same time that the good-paying jobs require more education. As a result, the county has remained heavily dependent on lower-paying jobs in retail, service, tourism and agriculture.

Some experts think the growing imbalance here is partly cyclical, brought on by the recession, which drove wages down further. Additionally, with an abundance of well-educated workers in the county, there aren’t enough good-paying jobs for them.

To illustrate the changing economic picture locally, The Tribune profiled three San Luis Obispo County workers. Here are their stories:

A top earner

Bright lights illuminate the factory floor of one of Paso Robles’ manufacturing firms. As line staff piece together small parts, the factory’s chief executive officer greets workers. This manufacturing executive, (who requested anonymity in exchange for disclosing his salary) oversees engineers, machinists and assembly workers at a several-hundred-employee factory whose workers earn $10 an hour on average.

Annual sales are about $60 million, while annual profits are about $12 million, he said.For his work, the CEO is paid $190,000 a year plus bonuses between $30,000 and $80,000.

While the executive has seen his income increase since the beginning of the decade — in similar jobs at different firms — the past couple of years, he has been hit by a wage freeze, he said. To help his employees, he said, he gave his last bonus to them.

Despite the pay freeze, the CEO’s increase in pay from 2002 to 2009 reflects what has happened to the county’s top earners making $80,000 and up.

Since 2002, the number of top earners has risen from about 1,190 people to more than 5,910 in 2009, according to the EDD. At the same time, their earnings grew from about $111 million in 2002 to $589 million in 2009.

UC Berkeley’s Richard Walker, a professor of geography who specializes in the state’s economy, said the income gap has been growing for some time in California and the nation.

For upper-level skilled workers, things have been going well over the past three decades, Walker said. Technological literacy, especially in California, has been a dividing force. The workers in the top 20 percent of the workforce have done well because they have been able to gain the skills needed for high-end jobs, Walker said.

A man in the middle

For almost three decades, 59-year-old Tom Jamason has worked for Atascadero’s parks department, making sure the grass is trimmed and the trash is picked up.

Since his start in 1983, Jamason received a steady increase in pay. Now, as the lead maintenance worker, he earns about $50,000 a year.

Jamason, shop steward for the Service Employees International Union Local 620, said workers in his department made modest wage gains before 2007.

“We kept up” through cost-of-living increases, he said.

But since then, there’s been a pay freeze, the workload has increased and most empty positions have gone unfilled, he said. Meanwhile, consumer prices have increased.

“I don’t see things getting better,” he said.

Jamason is part of the middle class in San Luis Obispo County that has seen a slight growth in recent years, but an equal drop in income. The largest body of workers in the county — earning between $30,000 and $79,999 — is made up of nearly 40,000 people.

Since 2002, their collective share of the county’s wages has shrunk by about 5 percent, even though there are 2,500 more people in this category today. In 2002, their earnings made up 59 percent of the county’s wages. Now it is only about 56 percent, or more than $1.9 billion.

The decline of middle-income wages, said Christopher Thornberg of Beacon Economics, is partially because many employers over the past several years have told their workers to either take a pay cut or lose their jobs. In many cases, people have been willing to take the cut even if it meant it took them down a notch economically, he said.

Low-end workers

Kate Boring spends part of her time behind the espresso bar at Linnaea’s Café in San Luis Obispo, delicately twisting the foam into patterns atop the drinks she prepares.

But that’s only one of Boring’s three jobs. She also teaches swimming at Cuesta College and sells ads for the Solstice Green Directory. She loves each but wouldn’t mind finding one that could pay the bills. Even with three jobs, the 22-year-old only makes about $23,000 a year.

Boring is among the roughly 38,660 workers in the county who make $29,999 or less a year.

While this group of workers is the county’s second largest, its portion of the wage pie has shrunk in the past decade by about 28 percent, or $74 million. At the same time, the number of workers making $29,999 or less saw its share decreased by about 16 percent or almost 8,000 people.

Economist Kemp said that while the number of people at the bottom with a job has gone down, that does not mean that those workers have disappeared. In fact, they are the group most hurt during recessions.

Since 2002, the number of unemployed people in the county has jumped by about 5,000. And since 2008, when the downturn kicked in, about 2,000 people have dropped out of the workforce.

Neither of these groups are counted in the EDD’s survey, he said.

Michael Manchak, president and CEO of the San Luis Obispo County Economic Vitality Corp., said the high number of people working low-paying jobs has been a persistent issue locally. There are too many service jobs and chronic underemployment, he added.

What the county needs is more good paying jobs.

“We need a more balanced economy.”

Jeffrey A. Michael, director of the University of the Pacific’s Business Forecasting Center in Stockton, said he doesn’t see these trends reversing any time soon.

The three-decade-long trend that has seen the middle and bottom of the workforce’s wages decrease will only continue, he said. The groups’ lack of education and the disappearance of good-paying manufacturing jobs are a fact of life, he added.

A LOOK AT OUR METHODOLOGY

Personal income typically includes wages, rents, dividends and unemployment and Social Security payments. For the purpose of this analysis, The Tribune looked only at wages because that’s how a majority of workers get most of their income.

We compared wages in 2002 and 2009, which included a period of growth followed by the severe economic downturn.

Data was based on a quarterly survey by the state’s Employment Development Department that is a snapshot of nearly all workers earning wages in the county. It excludes part-time employees and business owners who are not on the payroll.

While most employers participate in the survey, a small percentage do not.